Maritime shipping is experiencing a period of decline: both volumes and freight rates are falling. It is possible that this is due to the global recession.
The rise of the shipping industry came at the onset of the pandemic in 2020. Then the demand was so great that the companies did not have enough containers.
But all this is in the past. Now the containers, and the ships themselves, stand idle for many weeks.
Some transport companies, such as A.P. Moller-Maersk A/S and Mediterranean Shipping Co. have even begun to return chartered ships to their owners, as at least 7% of them are not in use.
Along the way, they have to think about how to behave in this difficult situation.
Why is everything crashing?
One of the main reasons is the decrease in demand for a large number of goods in the US and Europe. As a result, exports to these regions of the world from China are steadily declining.
For example, over the past 3 months, transportation on the Asia-US route has decreased by 30%, Asia-Europe by 20%.
This may be due to the high inflation of both the dollar and the euro. Most Americans today don’t have the money to spend on something «extra»: almost everything goes to food, fuel and services.
So ordering goods from China through the same Amazon has become much less. By the way, Amazon also notes a strong decline in revenue, as well as maritime carriers.
This situation hits the pocket of a lot of people. “There are 16,000 truck drivers registered here, but now only 3,000 are working,” say export port drivers in China.
Another problem related to the previous one is a strong increase in inventories of importers of Chinese goods.
Stocks are not being sold. Experts predict that this problem may persist for several more months.
What to expect next?
In many ways, whether ocean carriers can see a recovery in demand depends on the state of the US economy.
It does not inspire much optimism. Despite the fact that many prefer to avoid the word «recession», a significant decrease in demand for Chinese goods from Americans is a very telling sign.
If the situation does not improve, a new round of «price wars» between shipping operators is not ruled out.
Already, the lack of demand has led to a “downward price spiral”. Today, transporting a container from China to Los Angeles costs about $1,240, while a year ago it cost about $15,600, which is an order of magnitude more.
It is noteworthy that now shippers do not want to fix freight rates for the whole year, but prefer to conclude contracts for only a couple of months. Obviously, they expect rates to fall further.
